Bank of England gets pretty intimate with the London Bullion Market Association

GATA's friend and consultant R.M. calls attention to some documents demonstrating that the Bank of England's involvement with the gold market may be even more intimate than generally understood.

In a presentation to the London Bullion Market Association's Fifth Annual Assaying and Refining Seminar, held in March 2013, a Bank of England customer relationship manager, Luke Thorn, disclosed that the bank participates on three LBMA committees.

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And at the LBMA's Precious Metals Conference in Rome last September, the head of the Bank of England's Customer Banking Division, Matthew Hunt, confirmed the bank's participation on two of those committees:

"More specifically on gold," Hunt said, "though we are not active traders in the market, we are a large custodian and some of the people in our team responsible for gold observation sit on the LBMA Management Committee and the LBMA Physical Committee as observers. Thus we retain a significant engagement with the gold market via that route."

Thorn said the Bank of England holds gold "on behalf of our customers, who are Her Majesty's Treasury, central banks, and some LBMA members."

Of course having private customers and such a "significant engagement" in a commodity market puts a central bank in a peculiar position. After all, as Thorn notes, there are many gold vaults in Britain besides the Bank of England's. So it may be asked why the bank maintains such business at all -- unless, of course, gold is not a mere commodity but the world's natural and international money whose valuation central banks may very much want to control lest gold embarrass their own currencies.

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